Mr Clark also launched the first steps in a Fair Funding Review, which will provide councils with their fair share of funding according to local needs under the new system.

Communities Secretary Greg Clark said:

For years, councils have been calling for central government to give them the power to retain local taxes, including business rates.

Today, we set out the first steps towards making that ambition a reality, transforming the relationship between Whitehall and town halls and putting local government at the heart of delivering strong economic growth for their communities.

These next few weeks offer councils an historic opportunity to play their part in these radical reforms and to shape their financial futures for decades to come.

A funding system fit for the future

In February, the government confirmed a 4-year funding settlement for councils, giving local leaders the certainty they need to plan ahead with confidence.

In particular, this set the stage for the move away from central government grant and towards 100% business rates retention by 2020.

Liverpool and Manchester are already taking the first steps towards 100% business rates retention, with London also retaining more of the rates they collect.

Today, the Communities Secretary canvassed councils for their views of how these reforms will work. Key changes will include:

ensuring the system is designed to encourage and reward councils that promote and support economic growth in their areas

ensuring a system of redistribution of funding that recognises the needs and demands of different councils, including in cases where there are combined authorities and mayoral areas

measures to manage risk within the system, including the improved management of appeals

new flexibilities for councils to enable them to reduce the business rates tax rate and, where there is a combined authority metro mayor, to raise an infrastructure levy

But elements of the current system of local government funding are expected to remain, including:

a level of redistribution between councils, through a system similar to top-ups and tariffs – underpinned by the Fair Funding Review

protection built into the system to insulate authorities from shocks, or significant reductions in income

Enterprise Zones continuing to keep 100% in the growth in business rates for 25 years – encouraging their work to increase economic growth in their areas

the New Burdens Doctrine, which ensures that departments assess and adequately fund the impact on councils of any new policies, will remain in place

Alongside this, the Fair Funding Review will be a key part of the finance reforms, ensuring a thorough assessment of the relative needs of local councils, in a world where local government is self-sufficient and funded through local taxes.

Today, Mr Clark started the first steps of that review, with a call for evidence from councils.